Declining of US Consumer Spending Level

The level of consumer spending in the United States in July 2014, unexpectedly decreased. Reported by Reuters, the Commerce Department said consumer spending declined by 0.1% in the last month. This decline was the first drop since January, after rising a revised 0.4% in the previous month. Whereas, the economists, previously expect consumer spending will increase in accounts for more than two-thirds of economic activity, to rise 0.2% in July.

This decline is surprised because the United States has just announced the acceleration of national economic growth. Moreover, IMF was also predicted positive economic growth of United States economic. Therefore, this decline being a sign to the US should provide more support to this case, despite the acceleration in economic growth and the decrease of unemployment rate.

The decline of consumer confidence in the United States is caused by citizen’s frustration by slowing wage increases. United States people have been waiting waiting for an acceleration in wage growth. By the stagnant of the wage rate, it drives the consumer spending down. Besides, business activities in the United States should strive to maintain economic momentum and improve the return value of the level of consumer spending in the coming quarters.

The government should take the proper plan to accelerate economic growth in other to increase the level of consumer spending. Other economic sectors, such as housing, business spending, exports and government activities can be an alternative to accelerate economic growth. In addition, labor market conditions can also be used to strengthen to drive the increase levels of consumer spending.

image source: fm.cnbc.com

Earlier, the United States government reported the annual economy grew at a 4.2%, in the second quarter of 2014. Meanwhile, in the course of the quarter, consumer spending grew at a 2.5%. While, the estimation of growth in the third quarter at levels is expected to grow at 3.6%. Savings level increased to USD 739,100 billion in July, it is being the highest level since December 2012, from USD 709,4 million in June.